Austin Real Estate Market Update – December 2009

The Austin real estate market ended 2009 on an up note, with both average and median sold prices up more than 5% over Dec 2008. Oh, but wait … December 2008 was a dismal month because we all still thought the financial world was falling off a cliff. But the stats are what they are so let’s have a look.

Number of homes sold is down 4.39% from a year ago, which is a small decrease compared to the numbers we were seeing earlier this year. Average list price is up 3.71% to $276,387, Median List Price is up 5.22% to $199,900, Average sold price is up 5.15%, Median  sold is up 5.39%, the Sold/List % is up 1.39% to 95.54%. And Average Price per Square Foot of sold homes is also up, by 1.11%, to $115.36.

Average Days on Market was up about 4% to 82 days, but Median Days on Market was down 14% to 48 days. The number of Not Sold was down also, though at 56% still a big number, but that’s normal for December when lots of sellers give up for the holidays.

Here is the chart showing Nov/Dec 2009 and Dec 2008 sales stats.

Austin Real Estate Sales Market Update December 2009 Sales
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Nov 2009 Dec 2009 Dec 2008 Yr % Change
# Sold 1515 1219 1275 -4.39%
Avg List $252,963 $276,387 $266,498 3.71%
Med List $185,000 $199,900 $189,990 5.22%
Avg Sold $242,349 $264,061 $251,128 5.15%
Med Sold $180,000 $194,858 $184,900 5.39%
Sold/List % 95.80% 95.54% 94.23% 1.39%
Avg SQFT 2113 2289 2201 4.00%
Med SQFT 1896 2050 1981 3.48%
Avg $ SQFT $114.69 $115.36 $114.10 1.11%
Avg DOM 73 82 79 3.80%
Median DOM 44 48 56 -14.29%
# Expired 474 854 866 -1.39%
# Withdrawn 832 699 851 -17.86%
Not Sold 1306 1553 1717 -9.55%
Not Sold % 46.30% 56.02% 57.39% -2.37%

So, that’s a bunch of numbers, but what does it all mean? Is the Austin real estate market rebounding from the slight decline of 2009? I think it is. 2010 will be better than 2009 for sellers. Buyers will still find plenty of good opportunities though.

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Austin Subdivision Smackdown #2 – Belterra vs. Teravista

Let’s take a look at a couple of Austin area subdivisions on opposites corners of the Austin Metro Area and see how each has held up during the downturn of the past couple of years. As reference, both locations are plotted on the map below. Teravista is in far NE Round Rock. Belterra is SW of Austin in Dripping Springs.

Austin Belterra and Teravista Map

Both communities are fairly new with very good, modern amenities, pools and community centers. Both offer homes that would cost more closer in, so these are value driven (more/nicer house for the money) communities and home owners will generally be trading off a longer drive for the lower price (though Teravista has more jobs nearby). Both are located in good school districts. Both have homes that are, on average, about 3,000 sqft in size average (2,743 Teravista vs, 2989 sqft Belterra). Sylvia and I have sold homes in both communities.

This analysis is simply to see if one subdivision has held it’s value better than the other. Sellers have had challenges in both communities, but let’s look at the actual numbers and see how they’re doing.

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Austin Rental Market Update – Oct 2009

The rental market for houses in Austin is still slowly improving, climbing out of the huge dip we took after the tech bust and 9/11. For October 2009, average and median rents are both up about 1%, but homes are taking longer to rent, averaging 42 days on market compared to 38 a year ago in October.

This is a macro view though. In talking with other property managers in Austin, it’s not uncommon for some homes to be renting for the same or less than a year earlier, while others can do a bit better. It’s really a function of the number of competing homes and the location of the property. It took 45 days for me to rent a central Austin home in 78704 recently and we had to take $50/mo. less than a year earlier. Had I accepted large dogs and/or poor credit, it would have rented right away, so rental criteria is also a determining factor in how long it takes and the amount attainable.

October stats are listed in the chart below.

Austin Real Estate Rental Market Update October 2009
Houses only (condos, duplexes, etc. not included) compiled from Austin MLS data

Sep 2009 Oct 2009 Oct 2008 Yr % Change
# Rented 665 660 684 -3.51%
Avg List $1,437 $1,421 $1,401 1.43%
Med List $1,250 $1,250 $1,250 0.00%
Avg Rent $1,419 $1,402 $1,388 1.01%
Med Rent $1,250 $1,250 $1,240 0.81%
Rent/List % 98.75% 98.66% 99.07% -0.41%
Avg SQFT 1970 1951 1882 3.67%
Med SQFT 1808 1800 1739 3.51%
Avg $ SQFT $0.72 $0.72 $0.74 -2.56%
Avg DOM 40 42 38 10.53%
Median DOM 32 34 29 17.24%
# Expired 56 55 83 -33.73%
# Withdrawn 148 114 180 -36.67%
Not Rented 204 169 263 -35.74%
Not Rented % 23.48% 20.39% 27.77% -26.59%

Let’s have a look at 2009 year to date through October, compared to the same period in 2008.

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Austin Real Estate Market Update – Oct 2009 Stats

October saw a huge 31% increase in the number of sales in Austin over the same month last year. Remember though, Oct 2008 took a 28% dip from the year prior, so while this October did see a good increase in sales volume, due in part to the $8,000 tax credit program, we’re comparing a dreadful month one year prior to a turbo-charged market this year, thus the big swing. Nonetheless, brisk sales for October was not an unwelcome result.

Let’s take a quick look at the monthly home sales prices in Austin for the past 20 months.

Austin-Real Estate Sales Last 20 Months

You can see that May 08 and May 09 were both the peak sales prices in their respective years and that sales prices drop in the off seasons. This year is no different but our sales volume has picked up more than usual.

Let’s see in the graph below how October 09 compares in all the metrics to October 2008.

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Doing Business with City of Austin Remains Difficult

Ask any builder, remodeling contractor, plumber, electrician, etc. what it’s like to obtain permits and do a project in the city of Austin, and you’ll marvel at the uniformity of response. You’ll hear simply, “it stinks”.

Some won’t work in Austin at all anymore. I spoke with a small builder a couple of years ago about this. He had become so enraged at the bureaucracy and hassles that he had sworn off Austin, pledging to never build anything in the city limits again. At that time he was working on a custom home in Williamson County, where he said it was like night and day and he was treated like a valued customer, not a nuisance.

One of my former investment clients built a duplex neighborhood in Austin in the early 2000s. That was his last. He moved the business up near Ft. Worth and builds apartments and duplex communities in that area. He told me it just didn’t make sense to remain in Austin. Where he is now, from the time they identify land for a project and make the purchase, they can have all permitting in place and start work in less than 90 days. In Austin it took him more than 2 years just to get started on the last project he did, a community of about 50 duplexes. And they kept changing the rules on him along the way. He said that doesn’t cut it, and left Austin.

And so when I read in the Austn Business Journal a similar tale of “never again”, it came as no surprise.

By the time Centro Partners completed the first phase of The Domain with an Austin Energy three-star energy rating, the developers had their fill of being green the Austin utility way.

When it came time to do the second phase, “we didn’t even bother,” said Kent Collins, company partner. “I didn’t want to slow down our permitting process.”

Austin remains a difficult city in which to do business. Not just for developers, but even small investors.

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Austin Real Estate Market Update – Sept 2009 Stats

Austin Real Estate sales values for September 2009 are even (up 0.04%) with the same month last year. The number of homes sold is actually up 0.61% from the same month a year ago, no doubt due to a surge in the lower priced homes caused by the $8,000 home buyer tax rebate. More on that in another article. Let’s take a look at the September chart.

Austin Real Estate Sales Market Update – Sept 2009
Homes only (condos, duplexes, etc. not included) compiled from Austin MLS data

Aug 2009 Sep 2009 Sep 2008 Yr % Change
# Sold 1706 1639 1629 0.61%
Avg List $255,966 $257,361 $255,585 0.69%
Med List $195,750 $194,900 $189,900 2.63%
Avg Sold $246,372 $246,185 $246,079 0.04%
Med Sold $190,000 $188,500 $185,000 1.89%
Sold/List % 96.25% 95.66% 96.28% -0.65%
Avg SQFT 2200 2144 2120 1.13%
Med SQFT 1973 1919 1909 0.52%
Avg $ SQFT $111.99 $114.83 $116.08 -1.08%
Avg DOM 72 67 66 1.52%
Median DOM 43 40 48 -16.67%
# Expired 492 529 819 -35.41%
# Withdrawn 897 794 910 -12.75%
Not Sold 1389 1323 1729 -23.48%
Not Sold % 44.88% 44.67% 51.49% -13.25%

Median sold prices are up almost 2%. The sold to list price gap is 95.66%, which is slightly less than the 96.28% a year ago. The “Not Solds” (expired and withdrawn) remain high at 45%, but are down significantly from Sept 2008 when more than half (51%) of all listings departing the Austin MLS were failed sales efforts.

Overall, nothing surprising or unexpected with the Austin market for September. Let’s take a look at the Year to Date stats for Austin.

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